Cannibalizing the Market

What happens when you incentivize buyers to buy via a ‘blow out’ or ‘event sale’?  That is to say, when you attempt to make car buyers buy on your schedule rather than in the normal course of the customers buying cycle.  Please read through the entire list.  What starts out as a positive, has many not-so-positive consequences.

  1. Spend large amounts of money to ‘move the needle’ over a short period of time.
  2. Create larger than normal physical traffic on your lot.
  3. Temporarily increase working capital.
  4. Put many of your customers into the hands of people who do not work for your dealership.
  5. Accelerate several people’s buying cycle to act now.
  6. Because incentives are being used, facility is now crowded with many who are not there to buy.
  7. Actual buyers are very likely to view the ‘event’ as a deterrent to their participation and are likely to go elsewhere to make their purchase.  Interviews with hundreds of people both who work at dealerships and others who are not connected with the car biz at all, have  stated that a crowded showroom, due to an event, would deter them from going into that dealership if they were ready to buy that day because they believed that it would be much more time-consuming than under normal conditions.
  8. My market share retention studies in Houston, Dallas, Charlotte, Los Angeles, Sacramento, Denver, Philadelphia and Atlanta indicate that market share suffers for dealers for two to three months after event sales take place.  This causes a yo-yo effect on your monthly market share as opposed to dealers who have a more consistent strategy.

People buy large ticket items mostly on their own schedule.  Attempts to make customers buy on your schedule is usually accompanied by cost (event costs, incentives, etc.).

If you are a dealer who uses event sales, you will likely find yourself in the revolving door of having to have events on a regular schedule much like the addict, because each month with an event is followed by two to three months with decreased market share requiring another bump…and another supplied by an event.

The answer is to make your marketing targeted to those who are in the buying cycle and do it regularly so that your name is in front of those who are in their buying cycle.

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About dealerite

National affiliations of professionals who are engaged in changing the culture of the automobile retail business. Key focuses currently include Compliance, Behavioral Marketing and Phone Skills.
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